Morning all. I’ve been reading various threads on here for a few months and finally have something specific enough to post about.
We live on a private unadopted road, about 12 properties, with a management company that’s supposed to handle road maintenance, drainage, lighting etc. The problem is the servient landowner (who owns the strip of land the road crosses) is also a director of the management company. He’s been blocking expenditure on resurfacing for two years now while simultaneously running HGVs across the road surface for his own business. The road is falling apart. Several of us have complained to the council but they say it’s a private road and nothing to do with them, which is technically correct but incredibly frustrating.
We’ve had a solicitor look at the TP1 transfer documents and there is a clear covenant requiring the landowner to maintain the road to a reasonable standard. The solicitor reckons we have a decent case but estimated £15k to £25k to pursue through the county court if it doesn’t settle, which is eye-watering for what is essentially a pothole and drainage dispute (albeit a serious one).
So my question is about legal expenses insurance. I have it as part of my home insurance with Aviva, £100k cover apparently. I rang them last week and they said I need to submit a claim form and the insurer’s panel solicitor assesses whether there’s a reasonable prospect of success. Has anyone actually been through this process? I’m worried they’ll find some exclusion (pre-existing dispute, property maintenance not covered, whatever) and I’ll have wasted another month.
Secondary question, has anyone dealt with a management company where a director has an obvious conflict of interest like this? Companies House shows it was set up years ago but never files proper accounts. I know you can report to Companies House but in my experience that achieves square root of naff all.
Thanks in advance for any pointers 
We had a boundary dispute with our neighbour about six years ago, not quite the same scale as yours but similarly annoying, and I did use the legal expenses cover on our home insurance. It was with LV= at the time, not Aviva, but the process was broadly similar. You fill in their claim form, send all the documents, and then their panel solicitor reviews it. Took about three weeks to get an answer in our case, and they did accept it.
The catch was the panel solicitor they appointed was based in Manchester and had no local knowledge whatsoever. They were competent enough but everything took twice as long as it should have because they were doing it alongside however many other cases. We eventually settled out of court after about eight months, which our own solicitor said was a good outcome. Total cost to us was nil beyond the policy premium, so I can’t complain.
The thing I’d flag is the pre-existing dispute point you mentioned. Some policies have a cut-off, typically 180 days before the policy start date. If you’ve been dealing with this for two years you’ll want to check when you first notified anyone formally. If the dispute pre-dates the current policy period and you didn’t have continuous cover with the same insurer, that could be a problem. Worth digging out the exact policy wording before you submit anything.
Reporting to Companies House is a waste of a stamp. Theyve got no enforcement powers worth mentioning and dormant company filings are way down their priority list. The lever you actually have is a personal claim against the director for breach of the covenant, not a claim against the management company. If hes the one running HGVs across it and hes named in the TP1 as having the obligation, go after him personally. That focuses the mind a lot quicker than a Companies House complaint.
@rb471956 fair enough on Companies House, I suspected as much but it was worth asking. The frustration is that the management company is technically active (not dormant), it just does square root of naff all. The sole director is the servient landowner, who also owns the access strip the road sits on. So every time the rest of us want anything done, resurfacing, drainage, even getting the potholes filled, we have to go through him. And he has zero incentive to spend money because the road deteriorating doesn’t affect his property (he has separate access off the B road).
@greenwhistle_hants that’s really helpful to hear your insurance actually paid out on a boundary dispute. Can I ask a couple of things? Was it your home insurance legal expenses cover or a standalone policy? And did the insurer try to settle before it got anywhere near court? Ours is with Aviva and I’ve read mixed things about their panel solicitors for property disputes.
The other complication I probably should have mentioned is that the TP1 transfer when we bought references a contribution schedule that was supposedly attached as an annex, but our solicitor at the time (who has since retired, naturally 
) didn’t actually get a copy executed. So we have a covenant to contribute but no agreed mechanism for calculating shares. I’d be interested to know whether that weakens or strengthens our position if it came to it. IANAL obviously but I suspect a court would imply a reasonable equal split, though that doesn’t help when the director just ignores invoices.
Thanks both, genuinely useful to get practical perspectives rather than the usual “get a solicitor” (which yes, I know, but ££££ and we’ve already spent more than I’d like to admit on initial advice).
Had a near identical situation on one of my properties in Gateshead.. private road, six houses, management company that existed on paper only. Director was the original developer who’d long since retired to Portugal and couldn’t have cared less.
I wouldn’t pin your hopes on legal expenses insurance for this. Mine (through L&G at the time) rejected the claim on the basis that the dispute was “pre-existing” because I’d mentioned it to the insurer in a phone call about something else six months earlier. Apparently that counts as notification and starts the clock.. Even if you get past that hurdle the panel solicitors they appoint are usually volume conveyancers who don’t know one end of an ERC from the other.
The missing contribution schedule is actually your leverage though?? If there’s no agreed mechanism, the director can’t enforce contributions either. So you could arguably withhold payment and force him to come to you to negotiate a proper deed of variation. Risky, but it changes the power dynamic.
Cheers!
@theartfulfreeholder that Gateshead situation sounds depressingly familiar, right down to the absent director. Can I ask how you actually resolved it in the end? Did you go through your legal expenses insurance or was it more of a direct negotiation with the other residents to take over the company?
The reason I ask is that I’ve been back through my policy wording this weekend (riveting Sunday morning reading 
) and there’s a clause that excludes disputes where the policyholder “knew or ought reasonably to have known” about the issue before the policy inception date. Which is a problem, because obviously we knew the road was unadopted when we bought the place. What we didn’t know was that the management company director would stop responding to emails and let the road deteriorate to the point where the postman complained to us about his suspension.
I rang the insurer’s legal helpline on Friday and got a callback from a panel solicitor who was helpful enough but basically said they’d need to do a “prospects of success” assessment before agreeing to fund anything, and that these assessments typically take 4-6 weeks. So even if they do agree to cover it, we’re looking at summer before anything actually happens.
Meanwhile two of the other residents have had quotes for resurfacing the worst section (about 40 metres near the junction) and they’re coming in at £8-12k depending on specification. Split six ways that’s manageable, split three ways (which is what it’ll actually be, since the other three households won’t engage) it’s a lot less fun.
Has anyone here actually got to the point where a legal expenses insurer funded a dispute like this to conclusion? Not just the initial assessment but actually paid out for solicitors and court fees? I keep reading that the success rate on these claims is very low but I’d love to hear from someone who’s been through it. Cheers
Ive seen exactly one legal expenses claim paid out in full and it was a straightforward boundary encroachment with clear title plan evidence. Anything involving multiple parties and a management company thats technically still active but not functioning, forget it. The prospects of success assessment is where they kill it. They set the bar at 51% but in practice if its messy they just say no.
Your best bet is getting three of you to chip in for the resurfacing and then pursuing the non-payers through small claims for their share afterwards.
@Birch_Rosamund in the end we didn’t use legal expenses at all.. tried the same route you’re on, got the same “prospects of success” runaround, and after about six weeks of back and forth they declined on the basis that the dispute was “pre-existing” (sound familiar??).
What actually worked was far more prosaic. I got hold of the Companies House filing history, confirmed the director hadn’t filed a confirmation statement in two years, and applied to have the company struck off under S1003. That got his attention remarkably quickly.. suddenly he was happy to resign as director and transfer his shares for £1. We appointed two of the more engaged residents as directors, opened a new bank account, and started collecting the maintenance contributions properly.
Total cost was about £400 in Companies House fees and a few hours of my time reading the legislation. No solicitor needed. The resurfacing we then did through the revived company, split six ways as it should have been from the start.
Obviously your situation is different because the director is apparently still active.. but if the company hasn’t filed its confirmation statement on time, you’ve got the same lever available. Worth checking the filing history. Cheers!
@theartfulfreeholder that mirrors what I’ve heard from a few people now. A friend of ours in Ringwood had something similar, unadopted lane shared between about eight houses. In the end what worked was getting all the residents together, agreeing a fixed annual contribution per property, and just maintaining it themselves with a local contractor. Bypassed the management company entirely. The legal expenses route went nowhere for them either.
The problem is you need unanimous buy-in, and there’s always one household who refuses to pay or thinks the road is fine as it is. In their case it was the chap at the end with the 4x4 who reckoned potholes were character. Took about two years of increasingly passive aggressive newsletter updates before he came round 
Not sure that helps @Birch_Rosamund given the complexity of your setup, but thought it was worth mentioning.
@greenwhistle_hants thanks, and I wish it were that simple here. The issue is that our transfer deeds (TP1) specifically require maintenance to be carried out by the management company, and the estate rent charge is payable to the company regardless of whether they actually do anything. So even if we all clubbed together and hired our own contractor, we’d still be liable for the ERC on top, and the company director (who is also the servient landowner and original developer, naturally) has made it clear he considers the charge enforceable.
We did try the collective approach about two years ago. Got nine of the twelve households to agree in principle. Then the director sent letters threatening to enforce the ERC arrears (which some residents had stopped paying in protest) and three of the nine backed down immediately. Can’t blame them really, nobody wants a charge registered against their property.
What I’m now wondering is whether there’s any mechanism to force a change of director or compel the company to actually spend the ERC income on maintenance. Companies Act 2006 has provisions for unfair prejudice (s.994) but that’s really designed for shareholders and I’m not sure we’d qualify as “members” in the relevant sense. The residents aren’t shareholders in the management company, we’re just people who happen to have covenants referencing it.
Has anyone dealt with a situation where the management company exists but is essentially a one-man operation serving the director’s interests rather than the estate? IANAL obviously but it feels like there should be some remedy here beyond “spend £20k on a solicitor and hope for the best”